Blockbuster Video-Rental Chain Will Shut All U.S. Stores

A file photo shows a Blockbuster Inc. store in New York, in Sept. 2010. Blockbuster will close its remaining U.S. stores. Photographer: Jin Lee/Bloomberg

Nov. 6 (Bloomberg) -- Blockbuster LLC, the video-rental
company owned by Dish Network Corp., will close its remaining
300 U.S. stores, ending an era for a chain that was once a
ubiquitous part of American shopping centers.

Blockbuster will shut the outlets by early January and
discontinue its DVD-by-mail service by mid-December, Englewood,
Colorado-based Dish said today in a statement. Each Blockbuster
store has eight to 10 employees, so the move is expected to cost
about 2,800 jobs. Dish will keep the licensing rights to the
Blockbuster brand and use it to sell other services.

“People were waiting for the death knell for that business
for many years,” said Matthew Harrigan, an analyst at
Wunderlich Securities Inc. “With everything happening on the
digital distribution side, it has been long overdue.”

Dish, which acquired the chain out of bankruptcy in April
2011, had already divested Blockbuster’s international assets,
including operations in the U.K. and Scandinavia. The company
has been gradually shutting down the 1,700 stores it acquired.

“This is not an easy decision, yet consumer demand is
clearly moving to digital distribution of video entertainment,”
Dish Chief Executive Officer Joseph Clayton said in today’s
statement. “We continue to see value in the Blockbuster brand,
and we expect to leverage that brand as we continue to expand
our digital offerings.”

Blockbuster was once so dominant in the home-video market
that it was sued by independent video retailers, which claimed
in 2001 that the company’s revenue-sharing agreements with movie
studios hurt competition. The lawsuit was later dismissed.

Netflix Streaming

When the company was spun off by Viacom Inc. in 2004, it
operated about 9,000 locations -- before streaming video
services such as Netflix Inc. devastated the industry.
Blockbuster filed for bankruptcy protection in September 2010.

Dish took over Blockbuster the following year, aiming to
use the stores to sell mobile devices that could stream
Blockbuster movies. The plans broke down when U.S. regulators
didn’t immediately approve a waiver allowing Dish to use its
satellite spectrum for terrestrial data and voice transmission.

The Blockbuster brand will continue at Dish through the
Blockbuster @Home and Blockbuster on Demand options, which
stream movies and videos to televisions, computers and other
devices, Dish said.

Dish shares were little changed today in New York, closing
at $48.84. The stock has risen 34 percent this year.

While the demise of the Blockbuster chain is symbolic for
the industry, it won’t have a big impact on Dish’s prospects,
Harrigan said.

“It’s certainly an end-of-an-era type thing, but in terms
of that affecting Dish’s stock, it doesn’t have any particular
importance,” he said.